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The strong recovery of the Seychellois economy has continued in 2022, led by a rebounding tourism sector.
Growth is uneven across other sectors of the economy.
The government has made significant progress in restoring macroeconomic balances and performance under the EFF program is strong.
Maintaining the buildup of buffers against shocks, while protecting the most vulnerable people remains critical in the current global environment.
The executive Board of the International Monetary Fund (IMF) completed today the third review of Seychelles’ economic performance under the 32-month Extended Fund Facility (EFF) arrangement that was approved on July 29, 2021.
The completion of the review allows the authorities to draw the equivalent of SDR 6.5 million (about $8.6 million), bringing total disbursements under the current EFF to SDR 61 million (about $80.6 million).
The Executive Board’s decision was taken on a lapse-of-time basis [1].
Seychelles’ economic recovery has remained very strong in 2022, fueled by a faster-than-expected rebound of the tourism sector.
At end-September 2022, tourist arrivals were 125 percent higher than the same period in 2021, with stronger than expected demand from Europe and the Middle East. The recovery is mostly concentrated in tourism-related industries.
Real GDP growth is expected to reach 10.6 percent in 2022, before moderating to 5.4 percent in 2023.
Inflation has been relatively low (3.0 percent year-on-year at end-September 2022), reflecting the effects of currency appreciation in 2021 and earlier this year as well as the base effect of higher inflation in 2021.
Average inflation is expected decline to 3.0 percent for 2022, before rising to 4.5 percent in 2023, reflecting higher import prices and a fading of the cushion provided by the lagged effect of the rupee appreciation.
The recovery has been accompanied by a significant fiscal consolidation and social support for the most vulnerable.
The primary fiscal deficit in 2022 is expected to narrow to 1.1 percent of GDP, reflecting an extraordinary consolidation of 13.6 percentage points over the last two years.
Risks to debt sustainability have been significantly reduced with the public debt-to-GDP ratio expected to decline to about 68 percent at end-2022, a 21-percentage-point reduction in two years.
In 2023 and over the medium term, the primary balance will shift to a surplus, as revenue measures will more than compensate for the planned increase in capital expenditure.
The government has provided social support for the population, including through a program of targeted, temporary cash transfers to protect the most vulnerable from rising food and fuel prices, which is expected to run through early 2023.
Program performance remains strong.
All end-June 2022 quantitative performance criteria (QPCs) and indicative targets (ITs) as well as all end-September 2022 ITs were met.
Good progress was made toward structural benchmarks, although some were implemented with a delay due to capacity constraints.
The economic outlook, while positive, remains subject to risks, including a worsening of economic prospects in many of Seychelles’ key tourist markets (Russia, the European Union, and the United Kingdom), high food and fuel prices and their effect on the most vulnerable, a resurgence of COVID-19, higher-than-expected inflation, and higher non-performing loans from legacy forborne loans.
Climate-related shocks remain as medium- and long-term risks.
The authorities’ near-term priorities are to support the post-pandemic recovery and maintain debt sustainability as well as address the impacts of rising food and fuel prices on the most vulnerable.
Over the medium-term, the authorities’ measures aim to increase revenues and bolster capital expenditure, with a focus on climate-change mitigation and adaptation.
In addition, the structural reform agenda prioritizes revenue administration, public financial management, and governance, including digitalization, and state-owned enterprise reform.
[1] The Executive Board takes decisions under its lapse-of-time procedure when a proposal can be considered without convening formal discussions.
Guinea has reached a staff-level agreement to receive up to $69 million (25 percent of Guinea’s IMF quota) in emergency financing through the IMF’s new Food Shock Window under the Rapid Credit Facility; This emergency financing will help Guinea address its urgent balance of payments needs related to the global food crisis.
Guinea’s request will be discussed by the IMF’s Executive Board as soon as possible; Following Guinea’s Article IV consultation, IMF staff project growth to reach 4.7 percent in 2022, driven by continued strength in the mining sector, even as the non-mining sector grapples with the impact of the international price shock; Containing the effects of the price shock and cushioning its impact on food security is the key short-term policy priority.
An International Monetary Fund (IMF) staff team, led by Ms. Clara Mira, held a hybrid mission from October 4 – November 18, 2022, to conduct the 2022 Article IV Consultation discussions with Guinea, during which the authorities requested emergency financing under the IMF Rapid Credit Facility’s new Food Shock Window.
At the end of the mission, Ms. Mira made the following statement:
“The pandemic impacted Guinea’s non-mining sector harder than expected.
The war in Ukraine and the subsequent global food, fuel and fertilizer price shock and ensuing food insecurity, together with the period of political uncertainty, worsened the situation further.
Nonetheless, mining sector growth remained resilient, driven by strong mining production, enabling overall growth to reach an expected 4.4 percent in 2021 and 4.7 in 2022.
“Average inflation is expected to remain at 12 percent in 2022, broadly the same level as in 2021, due mostly to rising food and petrol prices.
A decline in central bank net credit to the government, made possible in part by the SDR allocation, and the appreciation of the Guinean Franc in the first half of 2022, prevented a further increase in inflation in 2022.
“Food insecurity has worsened since early 2022, with the number of people in acute food insecurity projected to reach over 11 percent by the end of the year.
As a result of the spike in international prices, fertilizer prices increased by more than 300 percent.
A potentially below-average harvest resulting from low use of fertilizers may lead to additional food insecurity in early 2023 and to higher food imports.
“Revenue performance in 2021 and the first half of 2022 was somewhat weaker than expected, despite the improvements observed in the first half of 2022.
Non-mining revenue has yet to return to its pre-pandemic levels.
Furthermore, food and fuel support measures led to significant foregone revenues—for the latter, of about 2.1 percent of GDP in 2022.
Increased digitalization and improvements in tax collection, as well as large one-off payments to the government, have thus far helped compensate some of the foregone revenues.
“The authorities’ restraint in recurrent spending and the under-execution in the capital budget compensated the overall weaker revenue performance and helped reduce the overall fiscal deficit in 2022.
“The surge in commodity prices in 2022 is expected to have a net negative impact on Guinea’s overall balance of payments.
While ongoing growth in mining output and export volumes compensates somewhat for this, the financing of the balance of payments appears more challenging.
“In this context, the IMF reached a staff-level agreement with Guinea on financial assistance under the Rapid Credit Facility through the IMF’s new Food Shock Window to help address Guinea’s urgent balance-of-payments need and rising food insecurity.
The disbursement under the Food Shock Window, of SDR 53.6 million (about US$69 million or 25 percent of Guinea’s IMF quota), will contribute to mitigate the severe impact of the food crisis.
It will also provide resources to support the most vulnerable through food and cash distribution, and finance interventions to improve the supply of fertilizers and support farmers.
“The mission welcomed the authorities’ efforts to refrain from additional central bank financing.
It also encouraged the authorities to scale-up the social protection system.
Down the road, the scaling up should support efforts to remove fuel and electricity subsidies, which are a drain on public resources and are highly regressive.
“The IMF mission encouraged the authorities to continue their efforts to mobilize domestic revenue –including from the mining sector and welcomed the bauxite transfer pricing reform—to create fiscal space to finance the pressing human capital and infrastructure development needs.
Debt sustainability must be preserved by maintaining a prudent borrowing strategy and a cautious use of non-concessional finance.
“Additional reforms to boost diversification, strengthen governance, and improve the business climate will enable a more resilient and inclusive recovery in the challenging domestic and international context.”
The team met with the Minister of Economy and Finance Moussa Cissé, Minister of Budget Lanciné Condé, Central Bank Governor Karamo Kaba, and other senior officials, and representatives from the private sector, civil society, and the development partner community.
The IMF mission wishes to express its gratitude to the Guinean authorities for the constructive discussions during the hybrid visit.
IMF staff is now preparing to present to the IMF’s Executive Board for approval a report of the Article IV consultation and the authorities’ request for emergency financing through the IMF’s Food Shock Window as soon as possible.
IMF staff and the South Sudanese authorities have reached a staff-level agreement for about US$112.7 million in emergency financing through the IMF’s new Food Shock Window of the Rapid Credit Facility combined with a Program Monitoring with Board Involvement; This emergency financing under the new Food Shock Window will help South Sudan address food insecurity, support social spending, and boost international reserves.
The Program Monitoring with Board Involvement will support economic policies aimed at maintaining macroeconomic stability and debt sustainability; South Sudan’s request for emergency support is subject to approval by IMF management and the Executive Board in the coming weeks.
Ahead of the Executive Board consideration of this request, the authorities will implement several reforms to strengthen governance and transparency.
An International Monetary Fund (IMF) staff team, led by Mr. Niko Hobdari, visited South Sudan from November 7 to November 17, 2022.
The team held discussions with the authorities on an existing Staff-Monitored Program (SMP) and on the authorities’ request for access to emergency financing through the new Food Shock Window of the Rapid Credit Facility (RCF) to address urgent balance of payments needs.
The IMF team also discussed South Sudan’s request for a 9-month Program Monitoring with Board Involvement (PMB).
At the end of the visit, Mr. Hobdari issued the following statement:
“The IMF staff team and the South Sudanese authorities have reached staff-level agreement for completing the third and final review of the SMP and on economic policies for a disbursement under the IMF’s new Food Shock Window of the RCF that would be combined with a 9-month PMB.
The disbursement is subject to approval by the IMF’s Executive Board, which will discuss it in the coming weeks.
Upon approval by the Executive Board, South Sudan would have access to about US$112.7 million (SDR 86.1 million).
These resources will be used predominantly to help address food insecurity, support social spending, and boost international reserves.
This disbursement will bring total outstanding Fund credit under emergency financing instruments to South Sudan to SDR 246.0 million, or 100 percent of its quota at the IMF.
“Ahead of the Executive Board consideration of the Food Shock Window request, the authorities will implement several reforms to strengthen governance and transparency.
These include publishing budget execution reports; publishing the results of a stock take of South Sudan’s external debt; publishing the Auditor General’s report on the second RCF disbursement and starting to address its findings and recommendations; as well as strengthening the process for contracting external debt and issuing sovereign guarantees.
“The combination of continued localized conflict, four consecutive years of severe flooding, and the rising price of staple commodities from Russia’s war in Ukraine has increased the number of people experiencing severe food insecurity to an estimated 8.3 million in 2022 (over two-thirds of the population).
For this reason, the authorities have committed to collaborate with trusted development partners to channel US$20 million of the RCF disbursement to make use of their existing systems to provide immediate humanitarian assistance to help address food insecurity.
“Significant reforms have been introduced since the start of the Staff-Monitored Program in March 2021, such for example the unification of the official and parallel exchange rates.
Fiscal pressures, however, led to the temporary resumption of overdrafts from the central bank and a return to the use of oil advances to finance the budget during the final quarter of FY2021/22.
The rise in the money supply due to monetary financing triggered a significant depreciation of the exchange rate, which has compounded external price pressures in an economy that is heavily reliant on imported goods.
“The IMF mission is encouraged by the actions taken by the Ministry of Finance and Planning and the Bank of South Sudan since August 2022 to restore fiscal discipline and rein in money growth, which has stabilized the exchange rate in recent months.
Going forward, it will be critical for the authorities to continue prudent fiscal and monetary policies and to consolidate and build on the first steps taken under the SMP to improve public financial management.
“The IMF mission met with the Minister of Finance and Planning Mr. Dier Tong Ngor, Minister of Petroleum Mr. Puot Kang Chol, Governor of the Bank of South Sudan Mr. Johnny Ohisa Damian, Commissioner General of the National Revenue Authority Mr. Patrick Mugoya, Auditor General Mr. Steven Wondu, and other high-level government officials, and representatives of the diplomatic community, private sector, and civil society.
The IMF team thanks the authorities for their hospitality and the productive discussions.
The IMF Executive Board completed the first review under the Extended Credit Facility (ECF) arrangement for Mozambique, providing the country with access to SDR 45.44 million (about US$59.26 million); The three-year ECF arrangement aims to support the economic recovery, reduce public debt and financing vulnerabilities, and foster higher and more inclusive growth through structural reforms; All end-June 2022 program performance criteria, indicative targets and the structural benchmark were met.
The monetary policy stance and proactive tightening since early 2021 are deemed appropriate to address higher than expected inflation.
The Executive Board of the International Monetary Fund (IMF) concluded the first review under the three-year ECF arrangement for Mozambique.
[1] The Board also completed the financing assurances review and approved the authorities’ request for modification of conditionality.
[2] This allows for the immediate disbursement of SDR 45.44 million (about US$59.26 million), usable for budget support, bringing Mozambique’s total disbursements under the ECF arrangement to SDR 113.6 million (about US$150million).
Growth is projected to increase in 2022, with the strengthening economic recovery despite the worsening international economic environment and rising commodity prices, reflecting a strong vaccination campaign and full lifting of COVID-related restrictions in July 2022.
Inflation has risen to double digits, driven by global fuel and food prices and tropical storms that impacted domestic food supply in the second quarter.
Fiscal developments in 2022 are broadly aligned with expectations, with strong revenue and contained spending.
Large liquefied natural gas (LNG) investments are driving the current account.
The first LNG project started production in November 2022.
Program implementation has been strong, despite the challenging environment, with completion of important program commitments in the areas of fiscal governance and anti-corruption.
Risks to the outlook are significant but balanced.
Passthrough of fuel and food inflation to other prices, social unrest, terrorism activity in the north and natural disasters are downside risks, balanced by upside risks from the strengthening recovery, strong prospects for LNG demand, and scope for higher-than-expected non-LNG growth in the medium-term.
Following the Executive Board discussion, Mr. Bo Li, Deputy Managing Director and Acting Chair, made the following statement:
“The economic recovery is strengthening, supported by a successful COVID vaccination campaign.
Program performance has been strong, with all quantitative targets and the structural benchmark met at end-June. While the outlook remains positive, driven by large liquefied natural gas (LNG) projects, significant risks remain, including from adverse climate events and fragile security situation.
Governance weaknesses and debt vulnerabilities also pose challenges.
In that context, continued capacity development and donor support remain imperative for Mozambique to achieve its development objectives.
“Solid revenue performance and spending restraint helped align fiscal outcomes with program objectives.
The authorities’ fiscal policy reforms will contribute to medium-term fiscal consolidation.
A broader VAT base will help secure buoyant and diversified revenues independent of commodity prices.
Reforming public sector remuneration will improve efficiency in delivering public services and create space for other spending priorities over time.
Revenue administration and public financial management reforms are also essential to achieve fiscal policy objectives.
“The draft Sovereign Wealth Fund law is a welcome step to develop a transparent, accountable, and efficient framework for managing LNG receipts.
Additional efforts are needed to mitigate revenue volatility, continue strengthening public investment management, and integrating natural resource revenues into the broader fiscal framework.
“The monetary policy stance and proactive tightening since early 2021 are appropriate to manage inflation expectations.
The Monetary Policy Consultation Clause (MPCC) upper inflation band was breached due to the rise in global fuel and food prices and the impact of domestic floods on food production.
Continued caution is warranted to ensure adherence to program targets on reserves going forward.
Additional exchange rate flexibility would help absorb external shocks.
“Progress continues across the governance and anti-corruption agenda.
The authorities are implementing their action plans to address shortfalls in the AML/CFT framework and Mozambique’s grey listing by the Financial Action Task Force.
Amending the public probity law and continued implementation of recommendations from the audit of COVID spending are near-term priorities.
“The climate policy agenda is being articulated and efforts should continue in integrating climate resilience criteria in public investment and project selection.”
Table 1.
Mozambique: Selected Economic Indicators, 2019–23
2019
2020
2021
2022
2023
National Income and Prices
Nominal GDP (MT billion)
963
983
1,033
1,142
1,292
Real GDP growth (percentage change)
2.3
-1.2
2.3
3.8
5.0
Consumer price index (percentage change, end of period)
3.5
3.5
6.7
15.0
8.5
Government Operations (percent of GDP)
Total revenue
29.0
23.9
25.7
25.7
25.9
Total expenditure and net lending
29.8
32.9
31.5
33.2
33.3
Overall balance, after grants
0.3
-5.4
-4.8
-3.7
-3.9
Primary Balance after grants
3.5
-2.3
-2.1
-0.2
-0.7
Public sector debt
99.0
120.0
107.0
102.9
101.4
of which: external
79.4
97.8
82.8
77.6
75.9
Money and Credit
Reserve money (percentage change)
19.1
9.0
-14.4
-5.1
11.2
M3 (Broad Money) (percentage change)
12.1
23.6
2.8
2.3
11.8
Credit to the economy (percentage change)
5.0
14.8
3.0
3.0
11.5
Credit to the economy (percent of GDP)
24.0
27.0
26.5
24.6
24.3
External Sector (percentage change)
Merchandise exports
-10.2
-23.1
55.6
38.9
-2.5
Merchandise exports, excluding megaprojects
8.3
-22.0
42.7
14.7
8.6
Merchandise imports
9.5
-12.9
33.2
70.1
-35.5
Merchandise imports, excluding megaprojects
9.3
-4.5
37.8
10.2
-0.6
External current account, after grants (percent of GDP)
-19.1
-27.3
-23.6
-41.5
-14.7
Net international reserves (millions of U.S. dollars, end of period)
3,605
3,493
2,927
…
…
Gross international reserves (millions of U.S. dollars, end of period)
3,884
4,070
3,470
…
…
[1] Arrangements under the ECF provide financial assistance that is more flexible and better tailored to the diverse needs of low-income countries (LICs), including in times of crisis (e.g., protracted balance of payments problems).
[2] The 36-month ECF arrangements was approved in May 2022 ( Press Release).
The staff of the International Monetary Fund (IMF) and the Egyptian authorities have reached a staff-level agreement on comprehensive economic policies and reforms that will be supported by a US$3,000 46-month Extended Fund Facility Agreement (EFF).
millions; The new EFF aims to safeguard macroeconomic stability and debt sustainability, enhance Egypt's resilience to external shocks, strengthen the social safety net, and intensify reforms that support higher private-sector-led growth and creation.
of employment; The deal with the IMF is expected to catalyze a large multi-year financing package, including about $5 billion in FY2022/23, reflecting broad international and regional support for Egypt; Egyptian authorities have also requested funding under the recently created Resilience and Sustainability Fund (RSF), which could unlock up to an additional US$1 billion for Egypt.
An International Monetary Fund (IMF) team, led by Ivanna Vladkova Hollar, Chief of Mission for Egypt, met in Washington DC and Cairo from October 4-27, 2022 to finalize discussions on IMF support to Egypt and the authorities' comprehensive economic reform program.
.
At the end of the discussions, Ms. Vladkova Hollar issued the following statement: “We are pleased to announce that the Egyptian authorities and the IMF team have reached a staff-level agreement on economic policies that will be supported by a 46-year agreement.
months.
within the framework of the Extended Fund Service (EFF).
The new EFF, with a requested access of SDR 2.35 billion (equivalent to about US$3 billion), aims to provide Egypt with budgetary and balance of payments support while catalyzing additional financing from regional and international development partners.
Egypt to maintain economic stability, address macroeconomic imbalances and spillovers from the war in Ukraine, protect livelihoods, and push through deep governance and structural reforms to promote private sector-led growth and job creation.
The deal is subject to approval by the IMF's Executive Board, which is expected to review the authorities' request in December.
“The rapidly changing global environment and spillovers related to the war in Ukraine pose significant challenges for countries around the world, including Egypt.
The IMF team welcomes recent actions by the authorities to expand targeted social protection, implement a flexible and durable exchange rate regime, and gradually phase out the mandatory use of letters of credit for import financing, as well as their firm commitment to address the necessary macroeconomic adjustments and carry out an ambitious agenda of structural reforms in the midst of a challenging global context.
“The government's fiscal policy under the EFF will be anchored to the reduction of general government debt and gross financing needs.
Continued fiscal consolidation will be supported by the implementation of the government's Medium Term Revenue Strategy (MTRS) which aims to improve the efficiency and progressivity of the tax system.
Social protection will continue to be strengthened, including through the temporary extension of emergency support to ration card holders and measures to protect the purchasing power of vulnerable wage earners and retirees.
The broad structural fiscal reforms will also aim to further improve the composition of the budget, strengthen governance, accountability and transparency, and support climate mitigation goals.
“The move by the Central Bank of Egypt (CBE) towards a flexible exchange rate regime is an important and welcome step to correct external imbalances, boost Egypt's competitiveness and attract foreign direct investment.
A commitment to durable exchange rate flexibility in the future will be a key policy to rebuild and safeguard Egypt's long-term external resilience.
The EFF will support the CBE's efforts to improve the functioning of the foreign exchange market, increase foreign exchange reserves and further improve the transmission of monetary policy.
Monetary policy, which will be firmly rooted in the CBE's price stability mandate, will aim to gradually reduce inflation within the CBE's inflation target.
“The EFF also aims to unlock Egypt's huge growth potential by broadening and deepening governance and structural reforms.
The program will include policies to unleash private sector growth, including reducing the state's footprint, adopting a stronger competition framework, improving transparency and ensuring better trade facilitation.
The authorities also plan to expand targeted social transfers and increase spending on social assistance, health and education.
These reform measures will be critical to addressing long-standing constraints to higher, more sustainable and more inclusive growth in Egypt.
“Egypt's international and regional partners will play a critical role in facilitating the implementation of the authorities' policies and reforms.
Additional financing of around $5 billion from multilateral and regional partners is expected for fiscal year 2022/23, which will help strengthen Egypt's external position.
“In the context of the EFF, the Egyptian government has also applied for funding under the recently created Resilience and Sustainability Fund (RSF), aimed at providing long-term, affordable financing to help build resilience, including against climate change.
Discussions on access under this mechanism, which could unlock up to an additional US$1 billion for Egypt, will take place in the coming months.
"We would like to thank the authorities and their technical teams for the frank and constructive discussions and look forward to continuing our engagement in support of Egypt and its people."
Development lenders in Africa can use the current global crises as leverage to help the continent significantly increase food production.
This was a common conclusion from panelists at this year's Finance in Common (https://bit.ly/3VAI1Bm) summit in Abidjan on Wednesday.
Participants agreed that development partners should work with governments and other policymakers to strengthen the resilience of private companies, especially those run by women.
Panelists included Beth Dunford, Vice President for Agriculture, Human and Social Development at the African Development Bank; Ijeoma Odulumba, Executive Director and Chief Financial Officer of the Nigerian Development Bank; James Mwangi, Group Managing Director and CEO of Kenya-based Pan-African Equity Group Holdings; and Admassu Tadesse, CEO of the Trade and Development Bank. The panel discussion, which unlocked smart and inclusive recovery in Africa through the private sector, was one of several at the three-day summit looking at how multilateral development banks can bring tangible solutions to Africa's development challenges.
The African Development Bank and the European Investment Bank co-hosted the summit under the theme; Green and Just Transition for a Sustainable Recovery to highlight the role of public development banks in Africa's recovery as the continent faced the impacts of the Covid-19 pandemic, climate change and Russia's war in Ukraine.
The meetings will take place less than a month before the UN climate conference, COP27, begins in Sharm el Sheikh, Egypt.
Dunford highlighted several initiatives by the African Development Bank to improve financial inclusion, in particular by empowering women through digitization and building skills to make their activities profitable.
She said that many women entrepreneurs in sub-Saharan Africa find it difficult to obtain affordable credit due to the misconception that their gender makes them high-risk borrowers.
Dunford said the African Development Bank was working to change the mindset that classifies women as not creditworthy.
“At the African Development Bank and in our gender strategy, we seek the economic empowerment of women in everything we do,” Dunford emphasized.
She added: “With every operation at the bank, there is recognition that empowering women is the key to achieving growth.
The strategy is bearing fruit by reducing poverty among families.” Dunford said the bank's Affirmative Financial Action for Women in Africa (AFAWA) program maintained its goal of closing the $42 billion financial gap for women.
She said the African Development Bank is also making sure there is room for the private sector as governments turn to the domestic market to mobilize credit amid tighter global conditions.
Tadesse said Africa must use climate action to stimulate climate-resilient agriculture and infrastructure to rapidly boost food production.
He said: “What really needs to be done now is to refocus on supply-side measures because climate change, the Covid-19 pandemic and the new shocks stemming from the war in Ukraine have left behind serious supply-side problems.
supply.
That's what's driving inflation, food insecurity, energy insecurity and all fronts."
The director general of the Trade and Development Bank said that current food losses represent 8% of greenhouse gas emissions and that addressing them would be climate action.
“If we are only going to invest in agriculture, storage and cold chains, just to stop the losses, that will go a long way towards addressing climate change.” Tadesse reiterated the call to channel more Special Drawing Rights from the International Monetary Fund to Africa.
"We want to see more SDR flow through Africa, and if it doesn't flow, it will be a missed opportunity."
Mwangi called for stronger collaboration between countries and development partners for a speedy recovery.
“I see us moving more and more towards scenario planning and as the situation evolves so quickly, working together and learning from each other will grow us,” she said.
Panelists also discussed current exchange rate volatilities, rising credit costs, and good governance in managing the development of financial institutions.
Drawing on the experience of the Nigerian Development Bank, Ozulumba said, "Governance is critical to building a development bank, and Nigeria is a good role model for efficient operations."
The Vice President of the European Investment Bank, Thomas Östros, moderated the panel.
Ahead of Wednesday's official opening of the Finance in Common Summit (FiCS) 2022 (https://FinanceinCommon.org) in Abidjan, speakers at a side event of the research conference called for a new global financial architecture to address the impact of global shocks on development.
countries.
They said it should include innovative ways to unlock further investment from the public and private sectors.
The third Common Finance Summit, entitled "Green and Just Transition for a Sustainable Recovery", is co-organized by the African Development Bank and the European Investment Bank. The three-day summit comes as the world grapples with the overlapping impacts of Covid-19, the Russian invasion of Ukraine, climate change, inflation and rising poverty, particularly in developing countries.
Participants also discussed the launch of a new database (https://bit.ly/3MTcmXN) showing that the number of Public Development Banks and Development Finance Institutions has reached 522+ in 154 countries and economies.
The database put the total assets of these institutions at $23 trillion.
Rémy Rioux, president of the Joint Finance Initiative, said the summit was taking place at a "very special moment" of urgency and tension.
He called on development finance institutions, governments and the private sector to seize the moment to build momentum, consensus, trust, collaboration and collaborative solutions.
"This should involve a fair and green energy transition, lifting more people out of poverty," he said.
He said it was important to kick off the summit with the research conference side event to hear from academics, policymakers, think tanks, “and all those who are willing to pay attention and help us better position ourselves and understand the role of public development banks so that we can play the most useful role.” Vice President of the European Investment Bank, Ambroise Fayolle, stated: "We see that the impact of Covid-19 continues, and the impact of the Russian invasion of Ukraine is also quite considerable.
All this has created new economic problems, including atmospheric inflation.
globally, increased poverty and pressure on pension markets.” He hoped that development banks would reflect on how to improve things, learn from each other and work more effectively as a group.
will allow us to better maximize our influence," Fayolle said.
Peking University's Institute for New Structural Economics and the French Development Agency (AFD) have collaborated to build on the university's pilot effort to "strengthen the first comprehensive database on PDB and DFI with rigorous criteria and methodologies", according to Régis Marodon, Sustainable Finance Advisor at AFD.
“We hope that our pilot efforts and persist entities to build the comprehensive database can promote original research on the fundamentals, operations, governance and performance of BPDs and DFIs to enhance our understanding of such important public financial institutions and harness their full potential,” said the executive.
Said the vice dean of INSE, Jiajun Xu. The session featured 18 research papers on weathering the storm, including the role of African Public Development Banks in Covid-19 recovery, green lending, Paris Agreement-compliant policy-based finance, artificial intelligence and pipeline of SDR, among others.
The Finance in Common 2022 Hybrid Summit (https://FinanceinCommon.org/), which will allow online and in-person participation, will take place in Abidjan, Ivory Coast, from October 18-20, 2022.
The global financial architecture must be completely reconfigured to reflect the needs and participation of countries in the Global South, many of which were under the yoke of colonialism at the time the current order was designed, Her Excellency the Prime Minister has argued.
Mia Amor Mottley from Barbados.
during the Sixth Annual Babacar Ndiaye Conference, held on the sidelines of the World Bank and IMF Annual Meetings in Washington DC, USA.
The conference, an initiative of the African Export-Import Bank (Afreximbank), was held on 14 October under the title “The developing world in a turbulent global financial architecture”.
In his welcoming remarks, Professor Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank, celebrated Dr. Ndiaye's enduring legacy and vision and called for "renewed efforts to reconnect Africa and the Caribbean through trade and investment."
in pursuit of the shared goal.
purpose of economic emancipation.
President Oramah commended Prime Minister Mottley for her global leadership in pursuit of justice and equality.
He referred to their shared belief that “African and Caribbean nations can turn the inequities of history into platforms for economic prosperity today and in the future.
Realizing that vision can only begin with the reconnection of the peoples of the Caribbean with their genealogical ties in Africa through trade and investment.” The conference was organized at a time of heightened geopolitical tensions, with the use of the US dollar as a weapon exacerbating risks of global fragmentation.
Simultaneously, the cycle of aggressive interest rate hikes by systemically important central banks in response to rising inflation has compounded macroeconomic management challenges, dramatically raising debt service costs and raising the specter of a debt crisis in the global south.
Prime Minister Mottley said that the current system operates to the disadvantage of Caribbean and African nations, whose unique circumstances are not factored into the decision-making of major financial institutions, but who are nonetheless drastically affected by those decisions.
Recalling the genesis of the Bretton Woods institutions, she said they were designed at a time when "we were not seen, we were not heard and we were not felt".
These structures need to be reoriented as a matter of fairness and to reflect the growing role that countries from the Global South play in the world economy.
He said global institutions must be reminded of their founding mandates and seek to fulfill their original purpose in a way that benefits all countries, but especially low- and middle-income countries, which currently face serious challenges.
Prime Minister Mottley outlined a series of recommendations to reform the existing international financial system to better reflect the challenges of our time, while creating the conditions for a globalization process that works for us all.
Among the various recommendations he articulated, the most pertinent include: Reforming the United Nations Security Council, especially its panel of Permanent Members, which currently lacks representation for more than 1.5 billion people of African descent; Democratize the global governance system, in particular the G7 and G20, by expanding representation to include the African Union as a full member; reallocate unused Special Drawing Rights (SDRs) issued by the IMF to alleviate liquidity constraints in the Global South; Develop new facilities for food and agriculture, clean energy, and climate change adaptation in response to emerging global challenges; Limit debt service payments to a certain percentage of exports, for example around 5% of total exports, as was done in Germany to help finance reconstruction after World War II.
As a percentage of exports, debt service payments have increased to 24% and 20% in Africa and the Caribbean, respectively; Reform global credit rating agencies to correct their intrinsic biases, which over the years have led global investors to overvalue risks in the Global South, with significant consequences for access to development finance, the sustainability of debt and economic growth.
To take just one example, Ghana's Eurobond yield is currently over 25%, while Greece pays less than 2% for new issues; Suspend temporary IMF surcharges, which further increase the debt burden at a time when rising interest rates are exacerbating the fiscal incidence of sovereign debt; Take advantage of the IMF Quota Review scheduled for 2023 to reform the Bretton Woods institutions and account for the change in economic weight.
The Prime Minister deplored the fact that 27 low-income countries, with a population of 611 million, have lower combined quotas than the UK, with a population of just 67 million, alone; Increase long-term financing and loans with longer maturities to support economic development and structural transformation in low-income countries.
To underline the benefits of long-term financing, the Prime Minister highlighted an example from Britain, where a bond issued in 1922 for reconstruction after the First World War was finally repaid in 2014, almost a century later; Reform the Bretton Woods institutions and hold them accountable to the Bretton Woods mandate, specifically development and not just crisis management and structural adjustment.
The Prime Minister reminded the audience that what we now call the World Bank Group began life simply as the International Bank for Reconstruction and Development.
He stressed that his namesake mandate, which was so effective during the reconstruction of Europe after World War II, has been notably less pronounced with regard to promoting development in the Global South, where poverty is rampant and unemployment rates unemployment have been in the Great Depression.
levels for decades.
Prime Minister Mottley emphasized the need to adopt a sense of urgency, arguing that the devastating effects of global warming, especially in countries on the front lines of the climate crisis, as well as the ongoing food and energy crises, require bolder and faster measures.
“Urgent and ambitious action is needed to save lives and livelihoods,” he said.
He also charged African and Caribbean countries to build their own capacity through creative linkages that allow them to finance and execute projects.
In that context, he praised Afreximbank for recently convening the inaugural AfriCaribbean Trade and Investment Forum, which he said provided an opportunity to build these bridges.
“The presence of Caribbean banks in Africa and African banks in the Caribbean is an example of how economic ties can be built and cemented,” he said.
The prime minister also praised President Oramah for his pan-African vision, which recognizes that global prosperity for Africans must include not only the African continent but also its diaspora.
Furthermore, the Prime Minister highlighted the benefits associated with the rise of digitization and new technologies, especially in terms of economic development and shared prosperity between Africa and its diaspora.
In that regard, he encouraged African and Caribbean leaders to prepare young Africans for the growing challenges of development by investing in artificial intelligence, information technology, cybersecurity and digitization.
“We have to stop looking north, because we have the capacity,” he said.
“Technology has become the main engine of growth and effective integration in the global economy.
Investing in our youth is not only a way to strengthen ownership of our development process, but also a way to reap the benefits of globalization,” said Dr. Hippolyte Fofack, chief economist at Afreximbank, in closing remarks.
the.
Dr. Fofack thanked and commended the Prime Minister for her leadership on the issue of reforming the international financial system, which for too long has undermined the process of global income convergence and sustained the colonialist dichotomy of developed and developing countries by restrict access to capital in developing countries.
Global South.
Dr. Fofack also emphasized that the emergence of an improved international financial system, as the Prime Minister put it, must be the result of a collective effort, and success requires the support of all stakeholders.
He invited world leaders, from the Global South and the North, as well as from the public and private sectors, to collaborate to implement the comprehensive recommendations outlined by Prime Minister Mottley to meet our shared challenges of the 21st century.
The European Union on Friday signed a 100 million Euros grant agreement (about 97.2 million dollars) for the International Monetary Fund’s (IMF) Poverty Reduction and Growth Trust (PRGT).
This is contained in a statement obtained from the IMF website on Friday in Abuja by the News Agency of Nigeria.
The statement said the funds would allow the IMF to make about 630 million Euros worth of zero-interest loans for PRGT-eligible countries, including African, Caribbean and Pacific countries (ACP), facing balance of payments difficulties.
“Access to affordable finance is key to helping these countries address the economic and food crisis situation worsened by Russia’s invasion of Ukraine.
“The EU’s contribution is part of Team Europe’s response to the crisis as it complements pledges by EU Member States to channel Special Drawing Rights (SDR) to the IMF’s Trusts for on-lending and their grants to the IMF’s PRGT Subsidy Account.
“Team Europe has so far pledged to channel SDRs contributions equivalent to about 23 billion dollars”
The SDR is an international reserve asset created by the IMF to supplement the official reserves of its member countries.
It is not a currency.
It is a potential claim on the freely usable currencies of IMF members, as such, SDRs can provide a country with liquidity.
The statement quoted the Commissioner for International Partnerships, Jutta Urpilainen as saying “Russia’s war of aggression against Ukraine has made many African, Caribbean and Pacific countries more vulnerable.
“This is at a time when they were still struggling with the consequences of the COVID-19 pandemic, and millions of people are pushed into poverty and hunger.
“With our contribution to the IMF’s PRGT, we want to help them address this crisis and avoid further deepening of inequalities.
“Today’s signature also marks our commitment as Team Europe to multilateral solutions to tackle today’s most pressing challenges.
Our partnership with the IMF is of key relevance in this regard, “she said
The statement also quoted the Commissioner for Economy, Paolo Gentiloni as saying “the economic shockwaves from Russia’s war against Ukraine are hitting low-income countries hardest, spurring demand for concessional loans from the IMF’s PRGT.
” It is essential that we maximise the resources available for this key financing tool.
With today’s 100 million Euros contribution, the commission is playing its part and complementing the on-lending of EU Member States’ SDR.
” These efforts bring us closer to the G20 global ambition of 100 billion dollars of voluntary contributions to vulnerable countries, a target we must strive collectively to achieve,” he said.
Managing Director of the IMF, Kristalina Georgieva was quoted as saying “I am very grateful to the EU and its Member States for their continued support to low-income countries facing crisis after crisis.
“Its grant contribution today of 100 million Euros will help to subsidise PRGT loans and support our provision of zero-interest lending to our most vulnerable members.
“I urge other countries to also contribute to the PRGT so we can support our members during these difficult times,” she said.
The statement said access to -interest loans provides affordable finance that increases liquidity and available budgetary resources in countries facing balance of payments difficulties.
It said this helps them to achieve, maintain, or restore a stable and sustainable macroeconomic and fiscal position.
“It also prevents depletion of international reserves, supports the import of essential goods and puts in place adequate social protection schemes for the most vulnerable.
“Concessional support through the PRGT is interest-free, with maturities up to 10 years.
”
The statement said, “this announcement is part of the broader 600 million Euro package already announced from the reserves under the 10th and 11th European Development Funds.
“This is to address the current food security crisis in ACP countries further aggravated by Russia’s invasion of Ukraine.
”
It said the package had three components that were complementary and mutually reinforcing.
The components include supporting food production and resilience of food systems (350 million Euros), humanitarian assistance (150 million Euros) and macro-economic support through the IMF’s PRGT (100 million Euros).
“With the additional 600 million Euros, the EU expects to allocate for food security and food systems programmes in partner countries 7.7 billion Euros until 2024 worldwide.
”
NewsSourceCredit: NAN
Ms Kristalina Georgieva, the Managing Director, International Monetary Fund (IMF) has urged policymakers to urgently “act now and act together’’ to address the global crisis.
Georgieva said this in her opening remarks at the Bank Group Annual Meetings 2022 news conference held in Washington DC.
A copy of the managing director’s speech was obtained by the News Agency of Nigeria from the IMF’s website on Friday.
“As we gather, we face a difficult global environment.
The world economy has been hit by one shock after another, COVID, Russia’s invasion of Ukraine, and climate disasters on every continent.
’’
She said these shocks had continued to harm people’s lives, and caused a cost-of-living crisis, adding that repeated shocks and growth setbacks raised a bigger question.
“Are we experiencing a fundamental economic shift in the world economy from a world of relative predictability and stability, to greater uncertainty and volatility?
“What does this mean for policymakers?
It is a much more complex time, which requires steady hands at the policy levers.
“That brings me to our Global Policy Agenda.
Let me give you a few highlights.
We are appealing to policymakers to act with a sense of urgency now and to act together.
“We see very clear areas where we can do better, even in this more complex environment.
’’
Georgieva said the first thing was to bring inflation down, saying that rising interest rates came at a cost to growth.
“But we also know that not tightening enough to put a leash on inflation would mean interest rates staying higher for longer, resulting in even more harm to growth and people.
’’
She said for central banks, this meant taking decisive action when necessary, and communicating clearly.
Georgieva said the second step was to “act now’’ to put in place responsible fiscal policy, adding that protecting vulnerable households and businesses must be prioritised.
“But we have to do that at a time when fiscal buffers are exhausted because of the pandemic and levels of debt are very high.
The obvious conclusion is that policy measures need to be temporary and well-targeted.
’’
She said policymakers should steer away from across-the-board fiscal support that is neither effective nor affordable.
According to her, if we are to help people and fight inflation, we must ensure that fiscal and monetary policies go hand in hand.
“When monetary policy hits the brakes, fiscal policy should not step on the accelerator that would make for a very dangerous ride.
’’
Georgieva said the third step was for policymakers to act now to safeguard financial stability, particularly as there were rising financial sector risks.
“Macro prudential policies need to be even more vigilant and proactively address pockets of vulnerability.
In this environment, we also must support vulnerable emerging markets and developing countries.
“It is tough for everybody, but it is even tougher for countries that are now being hit by a stronger dollar, high borrowing costs, and capital outflows, a triple blow that is particularly heavy for countries that are under a high level of debt.
’’
She said transformational reforms were needed to address climate change, make digitisation work for people, and address inequality.
“To confront these issues, we must act with a sense of urgency now, and we must act together.
The IMF is working with our 190 members on these issues.
“Our economic analysis is front and centre to help countries navigate this complex environment and avoid policy mistakes.
’’
The managing director said since the pandemic began, the fund had provided 260 billion dollars in financial support to 93 countries.
She said that since Russia’s invasion of Ukraine, the IMF had supported 18 new and augmented programmes with close to 90 billion dollars, and 28 additional countries were expressing interest in receiving support from the fund.
“That comes on top of the 650 billion dollars Special Drawing Rights (SDR) allocation.
We have an ambition of 100 billion dollars of on-lending of SDRs from countries in a strong position.
“Where are we?
We have just crossed over 80 billion dollars, and we are determined to reach the target in the coming months.
’’
Georgieva said the IMF had created its first ever long-term financing instrument to support the transformation of economies called the Resilience and Sustainability Trust which was now operational.
“We have pledges of 40 billion dollars, and staff-level agreements for the first three countries: Barbados, Costa Rica, and Rwanda.
’’
She said for countries suffering from the food crisis, the fund had expeditiously opened emergency financing called the Food Shock Window to provide rapid financing for urgent needs.
The managing director said the IMF was pressing for a more effective debt resolution mechanism.
According to her, we want the G20 Common Framework to become more predictable, with clear guidelines and equality of treatment for all creditors, public and private.
“We are also looking for ways to expand that kind of donor coordination to middle-income countries, such as Sri Lanka.
“We must act urgently, and act together to make a difference in the lives of hundreds of millions of people.
’’
NewsSourceCredit: NAN
